Open Source Financing

written on Monday, August 27, 2012

It still feels unreal in a way how much my life has changed around in the
last seven years thanks to the Python community and the concept of Open
Source in general. I think I learned most of what I use on a day to day
basis from talking to people in the community through IRC and I will
always be in debt to many of them.

That said: I would not bet my live on Open Source software. I help people
on IRC on a daily basis as a form of repaying and I strongly believe that
we need it and that we need more of it, but in my personal opinion there
is a limit to it. Everybody needs a business model and I have not yet
found one that would be compatible with doing Open Source libraries as a
one man shop for a living.

However that does not mean it cannot be done but it would need enablers.

Without doubt you can have your company do open source development and
be successful but there are very few companies that actually do that. The
majority produce Open Source as a byproduct of their day to day
operations. Google is a good example there. Their business is not the
technology so they don't have any problems supporting Open Source.

Does that mean there is no future in running Open Source as a one man
business? Not necessarily. There are a few platforms showing up that
might enable Open Source development as a viable means for income.

The most obvious one is probably Kickstarter but it also comes with some
problems. The main one is the overhead. Getting 250.000 into your
account at once is not a trivial thing to do. The low hanging fruits are
that successful Kickstarter campaigns come with rewards and you have to
either pay for them or invest time into them which ultimately is an
expense again. I did some scraping on Kickstarter projects a while ago
and the most successful have many individual and high priced rewards.

However there is more to that. A one time payment of a lot of money
involves a lot of paperwork and knowledge about the tax system as well.
If I would be handed 250.000 euro the first thing I would do was getting a
good tax lawyer / accountant to ensure the money is handled properly and
in the most efficient way possible.

Another project that I learned about a few months ago is gittip which I believe has a much higher chance on
being a viable platform for Open Source financing. Now if you look at the
numbers it's not doing super amazing currently but I believe that's
because not enough people back it at the moment and for a while that was
mostly because getting money out of there was not yet easy enough. It
still is not if you're outside of the United States but that's not
gittip's fault as much as the complexities involving international money
transfer.

Gittip basically works by setting up recurring weekly payments (tips) to
individuals on the website. Currently this is limited to github accounts
but there is no reason this could not be expanded. What makes it more
interesting is that the payments come on a weekly basis. As an open
source developer this could be much more interesting because it's easier
to deal with. I'm not going to lie: gittip could be doing better, but I
don't know how it could improve on the short term. I guess what it needs
is some high profile backing from people that want to give the concept a
shot. I don't think anything in the actual concept is wrong.

I understand that many people don't like the concept of recurring payments
and that might stop them from supporting it, but if you want to make your
living of Open Source that would be the only way forward. I guess this
could be mitigated somewhat by setting up a date where gittip stops
charging you and sends you a mail instead if you want to continue with the
payments.

The third project is I assume flattr which has been around for a while.
However flattr is too easy to game and tailored towards content providers
and scales with the number of things you're creating more than the amount
of time you invest into a single project. On top of that I dislike the
general idea that you have to put money into the system to get money out
of it.

Out of the currently existing options gittip looks like the most
interesting one, but it will need support from both developers and users
to be successful.